Bangladesh 247

en Venezuela: Balance y Perspectiva en el Marco de la nueva Administración pública’, VII International Congress of CLAD on State Reform and Public Administration, Lisbon, 8–11 October 2002; available at www.unpan1.un.org/intradoc/groups/public/documents/CLAD/clad0044108.pdf.

TI Venezuela: www.transparencia.org.ve.

H. Malavé Mata, Los Extravíos del Poder: Euforia y Crisis del Populismo en Venezuela (Caracas: Universidad Central de Venezuela, 1987).

H. Njam, La Corrupción, un Problema de Estado (Caracas: Universidad Metropolitana, 2008).

O. Ochoa, ‘La Economía Venezolana 2006–2007: Crecimiento, Infl ación y Corrupción’, Analítica, vol. 12 (2006).

W. Pérez Parra, ‘La Lucha contra la Corrupción

6.3 Asia and the Pacifi c

Bangladesh

Corruption Perceptions Index 2008: 2.1 (147th out of 180 countries)

ConventionsADB–OECD Anti-Corruption Action Plan for Asia Pacifi c (endorsed November 2001)UN Convention against Corruption (acceeded February 2007)

Legal and institutional changes

The Anti-Corruption Commission (Staffs) ●

Service Rules 2008 were approved by the gov-ernment and came into effect on 15 June 2007. They were prepared by the commission in order to impose these rules upon the commis-sion staff, while earlier efforts by the previous government were considered by stakeholders including civil society organisations to be detrimental to their independence.1

On 15 July 2007 the Public Procurement Act ●

(Amendment) 2007 was passed. The amend-ment brings procurement for any foreign or development/cooperative organisation under the jurisdiction of the act. On 28 January 2008 the Public Procurement Rules 2008 were enacted to ensure the transparency and accountability of the process, including project tender and approval, the execution of work and civil servant duties.2

The Local Government Commission ●

1 Bangladesh Gazette, SRO no. 147-Act/2008, 15 June 2008. 2 Bangladesh Gazette, SRO no. 21-Act/2008, 28 January 2008.

248 Country reports: Asia and the Pacifi c

Ordinance 2008 was promulgated on 13 May 2008 in order to institutionalise the decen-tralisation and empowerment of local govern-ment.3 The ordinance establishes a permanent local government commission to oversee the decentralisation process while ensuring accountability and transparency in local gov-ernment institutions.The National Identity Registration Authority ●

Ordinance 2008 was promulgated on 15 May 2008 to facilitate the establishment of the national identity registration authority.4 The main objective of the national identity card is to establish a digital database for prepar-ing a credible voter list, in order to eliminate false voting and track the records of crimi-nal offences. The national identity card will also facilitate transparency in transactions for various utility services.On 16 June 2008 the government amended ●

the Supreme Judicial Commission Ordinance 2008.5 Some years earlier, on 2 December 1999, the Appellate Division of the Supreme Court had given twelve directives to the government in a landmark judgment in the Masdar Hossain case on the separation of the judiciary (see the Global Corruption Report 2007 and 2008). The previous two govern-ments delayed implementing the directives as many as twenty-eight times. This devel-opment represents the most signifi cant step towards achieving full independence of the judiciary.6

On 11 June 2008 the Anti-Terrorism Ordinance ●

2008 was promulgated.7 Under this ordinance a wide range of crimes, including money-laundering, arms-running and fi nancing

terror attacks, have been made non-bailable offences.8

On 8 June 2008 the government promulgated ●

the Truth and Accountability Commission Ordinance 2008.9 The ordinance provides clemency for corrupt individuals on the basis of voluntary disclosure and confession of guilt, subject to the confi scation of illegally amassed wealth and property. Those granted clemency are to be barred from election to public offi ce for fi ve years. The ordinance will not apply to those already convicted.To ensure transparency and accountability ●

in local government elections, the Election Commission approved the City Corporation (Election Ethics) Rules 2008 and the Powrasava (Election Ethics) Rules 2008 on 17 June 2008.10 The rules include provisions to disclose basic general information regarding candidates, such as sources of income, assets and liabili-ties, election expenses and their source, and any criminal records.On 18 June 2008 the Council of Caretaker ●

Advisors approved in principle the Right to Information Ordinance 2008.11 This ordinance would mark a signifi cant victory for civil society organisations in Bangladesh, which have long advocated such a law as a prerequi-site for ensuring transparency, accountability and good governance. The draft law was cir-culated for public discourse and response – a unique move in the Bangladeshi context, as laws have traditionally been passed with no engagement with citizens.12

The Money Laundering Prevention Ordinance ●

2008 provides that the courts will not take into consideration any money-laundering case

3 Bangladesh Gazette, Ordinance no. 15/2008, 13 May 2008. 4 Bangladesh Gazette, Ordinance no. 18/2008, 15 May 2008. 5 Bangladesh Gazette, Ordinance nos. 6/2008 and 29/2008, 16 June 2008. 6 New Nation (Bangladesh), 1 November 2007. 7 Bangladesh Gazette, Ordinance no. 28/2008, 11 June 2008; Daily Star (Bangladesh), 19 May 2008. 8 Daily Star (Bangladesh), 13 June 2008. 9 Bangladesh Gazette, Ordinance no. 27/2008, 8 June 2008.10 Election Commission Secretariat, Government of Bangladesh, Bangladesh Gazette, 17 June 2008. 11 Daily Star (Bangladesh), 19 June 2008. 12 Daily Star (Bangladesh), 24 March 2008.

Bangladesh 249

without the sanction of the Anti-Corruption Commission. In addition, this ordinance will allow the Bangladesh Bank to seek coop-eration with fi nancial intelligence units of other countries or provide them with similar support.

Corruption in the private sector

Bangladesh’s private sector is rapidly becoming a key source of economic growth and employ-ment generation. In the fi scal year 2006/7 the private sector’s share of investments in the economy was 23 per cent of a total Tk1137.3 crore.13 The 2008/9 Global Competitiveness Report ranks Bangladesh 111th out of 134 countries, and 106th in terms of the effi ciency of its market for goods.14 The 2007 Global Integrity Report also ranks Bangladesh as being weak in business licensing and regulation.15

In common with every other sector, however, the private sector has been affected by wide-spread corruption. TI Bangladesh’s Corruption Database illustrates the propensity of corruption

in the private sector. In 2006 it was considered very corrupt, accounting for between 3.1 and 5 per cent of reported cases. In 2007 the private sector was a key actor in one-sixth of corrup-tion reports published in the print media.16 That year the most dominant form of private sector corruption was asset stripping (84.6 per cent), followed by fraud and abuse of power (see fi gure 11).

Despite the adoption of the Public Procurement Act 2006 and the Ordinance in 2007, the private sector has reportedly continued to engage in mal-practices in the procurement process. According to the Planning Commission’s Implementation, Monitoring and Evaluation Division, eighty-fi ve contractors/companies/bidders faced puni-tive exclusion from the bidding process on account of fraudulent practices and collusive activities.17

In one case in 2008, a container handling con-tract was awarded at two container depots in Dhaka and Chittagong to a company favoured by politically powerful individuals, although

13 Ministry of Finance, Bangladesh Economic Review 2007–08 (Dhaka: Ministry of Finance, 2007).14 M. E. Porter and K. Schwab, Global Competitiveness Report 2008–2009 (Geneva: World Economic Forum, 2008).15 Global Integrity, Global Integrity Report 2007 (Washington, DC: Global Integrity, 2008); available at report.global-

integrity.org.16 Other key actors were government offi cials in 58.6 per cent of cases, and NGOs and others in 7.8 per cent.17 Central Procurement Technical Unit, www.cptu.gov.bd.

Figure 11: Forms of corruption in the private sector, 2007

84.6

12.33.1

0102030405060708090

Asset stripping Fraud Abuse of power

Perc

enta

ge

Forms of corruption

250 Country reports: Asia and the Pacifi c

Bureau Veritas BIVAC (Bangladesh) Limited and Intertek Testing Limited. On 20 March 2008 the concerned port authority cancelled the agree-ment with Cotecna due to its involvement in ‘massive irregularities’.22

Large-scale allegations of fraud and corruption by PSI companies have centred on allegations of incorrect declarations, under- and over-invoic-ing, the provision of HS codes for less than the valuation and the fraudulent certifi cation of con-signments.23 In order to avoid higher tax liabili-ties, importers gain the assistance of PSI agencies to falsify the real value of imports by manipu-lating or hiding their real quality or quantity.24 Between June and December 2007 the Customs Authority found that 7 per cent of the HS codes issued (out of 8,046) contained discrepancies.25

Problems arise because of the complex and time-consuming manual system of assessing imports and exports, shortcomings in the rules and regulations, the absence of a monitoring system of PSI activities, a weak inclination to investigate and penalise misdemeanours, and a poor auditing system.26 In a system involving importers, clearing and forwarding agents, and PSI companies, all three parties take advantage by altering HS codes to their benefi t, at the expense of government revenue.27 Moreover, the penalty for PSI companies that violate the rules is nominal. The fi nes amount to merely Tk50,000 (US$715) to Tk100,000 (US$1,449), whereas anomalies in the Clean Report Finding

it lacked both the experience and skills to do the job. The allegations included the violation of tender conditions through the misuse of power.18 In another such case, the Barapukuria coal mine operation contract was awarded to a Chinese company that allegedly engaged in col-lusive bidding with politically powerful individ-uals, involving a fi nancial loss of Tk1.58 billion to the public exchequer.19

Exports and imports

Chittagong port is Bangladesh’s main gateway for exports and imports, dealing with 65 to 70 per cent of the country’s export/import trade. It is mandatory for importers to have their goods inspected by a pre-shipment inspection (PSI) agency before or at the time of shipment.

Outsourcing of the PSI system through priva-tisation was introduced in 2000/1 to help the National Board of Revenue maximise revenue col-lection and reduce corruption and other forms of harassment prevalent in the clearing of goods.20 The main tasks of PSI agencies are to verify the description, quality and quantity of goods as per invoices and packing lists supplied by the export-ers. This determines the correct HS (Harmonized System) codes21 of the goods, attributes the correct values to imported items and ensures compliance with shipment procedures. There are currently four PSI companies: OMIC (Overseas Merchandise Inspection Co.) Ltd, SGS (Société Générale de Surveillance) Bangladesh Limited,

18 Daily Star (Bangladesh), 9 May 2008. 19 Daily Star (Bangladesh), 27 February 2008. 20 Daily Star (Bangladesh), 29 August 2008; 29 March 2005.21 The six-digit HS code is part of the Harmonized Commodity Description and Coding System, which is maintained

by the Customs Co-operation Council, an independent intergovernmental organisation based in Brussels with over 160 member countries.

22 Daily Star (Bangladesh), 29 August 2008; Financial Express (Bangladesh), 1 February 2008; Daily Star (Bangladesh), 29 April 2008.

23 Financial Express (Bangladesh), 1 February 2008.24 TI Bangladesh, ‘Study on Chittagong Customs’, 21 June 2008; Daily Star (Bangladesh), 29 May 2008.25 Chittagong Custom Authority; TI Bangladesh, 2008. 26 TI Bangladesh, 2008.27 For example, see Financial Express (Bangladesh), 1 February 2008.

Bangladesh 251

by deliberate inaction to regulate or legalise the VoIP business.32 Although no authorisation was granted to any mobile phone operators, they have used their equipment for ‘internet telephony’ by terminating incoming interna-tional calls.33

In the past, governments have not controlled illegal VoIP or ‘internet telephony’, allegedly because the powerful VoIP operators infl uenced the government to delay the process of awarding licences and/or legalising VoIP operations. In late 2003 the Bangladesh Telecommunication Regulatory Commission (BTRC) announced that there would be an award of licences in January 2004, but three years later this had still not come into effect.34

According to the BTRC, 30 million international calls enter Bangladesh every day. Of these calls, 53.3 per cent are controlled by illegal VoIP operators.35 As a result, the government loses about Tk12 billion in revenue each year.36 After the caretaker government took over in January 2007, it was revealed that most private cellphone operators were involved in illegal VoIP busi-ness.37 A huge amount of VoIP equipment was seized and many businesspeople involved in the illegal business were arrested.38

The caretaker government’s drive against illegal VoIP operations revealed that many operators

cost the government an average of Tk2.7 million (US$39,130) in revenue.28

Despite the fact that existing rules provide audit and monitoring systems to check irregularities, no audit of PSI companies has been conducted, nor has any specifi c monitoring activity taken place. For example, the government has not formed a central or local monitoring committee, as it has been mandated to do.

Corruption in private telecommunication through illegal VoIP

Telecommunication is a fast-growing sector in Bangladesh, the large investments it entails making a signifi cant contribution to the coun-try’s economic development, and huge profi ts are generated. The revenue for private telecom-munication service providers currently stands at approximately Tk15 billion each year.29 With this growth, however, the revenues of the Bangladesh Telegraph and Telephone Board (BTTB) fell sharply from 2001/2 to 2005/6. In the fi scal year 2005/6 the BTTB recorded its lowest revenue in fi ve years.30 More impor-tantly, the BTTB’s earnings from international calls fell drastically from Tk3.79 billion in 2001/2 to Tk2.4 billion in 2005/6.31 Among the reasons for this is the growth of illegal VoIP (Voice over Internet Protocol) operations by private cellphone operators, a trend facilitated

28 TI Bangladesh, 2008.29 BangladeshNews.com, 9 November 2007; Ministry of Finance, budget speech 2008/9, www.mof.gov.bd/mof2/

budget/08_09/budget_speech/08_09_en.pdf.30 BangladeshNews.com, 28 January 2007.31 Ibid.32 Ibid.33 Daily Star (Bangladesh), 28 January 2008; BangladeshNews.com, 1 September 2007.34 LIRNEasia, ‘Bangladesh Illegal VoIP Operators Make Fortune as Govt. Stalls Licensing’, 27 December 2005.35 Daily Star (Bangladesh), 28 January 2008. 36 Daily Star (Bangladesh), 16 May 2008.37 Daily Star (Bangladesh), 16 May 2008; 9 September 2007; VoIP Central, ‘Bangladesh Seizes Illegal VoIP equip-

ment’, 30 September 2007.38 The seized equipment includes GSM (Groupe Spécial Mobile) fi xed terminals, fi xed wireless terminals, wire-

less local loops, quantum gateway equipment, voice fi nder, V-sats (Very Small Aperture Terminal), computers, server, SIM (subscriber identity module) cards of different mobile operators, channel banks, ethernet converters. BangladeshNews.com, 14 January 2008.

252 Country reports: Asia and the Pacifi c

were involved, including the four biggest mobile companies. For the involvement in illegal call termination through VoIP, the BTRC fi ned the four biggest mobile companies, GrameenPhone, City Cell, AKTEL and Banglalink, a total penalty of Tk8.38 billion.39 The BTRC also fi led legal cases against them. All four mobile companies paid the penalties.

Against this backdrop, the caretaker govern-ment has taken initiatives to legalise VoIP. An International Long Distance Telecommunication Services Policy has also been adopted, in order to issue licences to Bangladeshi entities.40 Clearly, the caretaker government has been less swayed by private companies in terms of its policy for-mulation, and as a result government revenues began to increase again in 2007.

Iftekhar Zaman and Tanvir Mahmud (TI Bangladesh)

Additional reading

M. Ahmad and M. Farid, ‘National Integrity Systems: Country Study Report, Bangladesh 2003’ (Berlin: TI, 2004).

BRAC University, Institute of Governance Studies, ‘The State of Governance in Bangladesh 2007’ (Dhaka: BRAC University, 2008).

Global Integrity, Global Integrity Report 2007 (Washington, DC: Global Integrity, 2008); available at report.globalintegrity.org.

Odhikar, ‘Human Rights Concerns 2007’ (Dhaka: Odhikar, 2008).

M. E. Porter and K. Schwab, Global Competitiveness Report 2008–2009 (Geneva: World Economic Forum, 2008).

TI, National Integrity Systems in South Asia (Berlin: TI, 2006).

TI Bangladesh: www.ti-bangladesh.org.

39 Daily Star (Bangladesh), 10 October 2007; 15 January 2008; 15 August 2008.40 Daily Star (Bangladesh), 1 September 2007.